CHICAGO | Economic & Business Development

[marothisu]

Originally Posted by glowrock

I hate to say it, but these numbers all seem INCREDIBLY low. Ridiculously low, in fact! Given not only my own personal experience, but that of a large number of people I know (nearly all of which are professional, college educated people with very solid skillsets!), I'd venture a very educated guess that these figures are highly influenced by people taking part-time positions or other positions far below their prior pay grade/professional level. Something is very much amiss here, as if the unemployment rates were truly this low, we'd have wage inflation like nobody's business. And frankly, unless you're in one of a very few chosen professions/industries, that's simply not happening.

Aaron (Glowrock)

Some of these cities in the Bay Area, Portland, Denver, Minneapolis, etc have been pretty low for awhile. Unfortunately for a lot of cities, the only numbers available are not seasonably adjusted which is what you have here. I guess what you have here is everything.

NYC seasonably adjusted percentage is 4.1%. Unfortunately Chicago, LA, etc don't have seasonably adjusted data available through the BLS for city especially. I think the fact that NYC has it available is pretty uncommon - I think it's usually just available at the state/region level. My guess is that it's around 4.3% to 4.5% unemployment for the city, which is not bad at all. As bad as it sounds, you do want to have some unemployment if your economy is large and the prospect for new jobs, companies moving there, etc is happening.

[bnk]

Originally Posted by marothisu

Some of these cities in the Bay Area, Portland, Denver, Minneapolis, etc have been pretty low for awhile. Unfortunately for a lot of cities, the only numbers available are not seasonably adjusted which is what you have here. I guess what you have here is everything.

NYC seasonably adjusted percentage is 4.1%. Unfortunately Chicago, LA, etc don't have seasonably adjusted data available through the BLS for city especially. I think the fact that NYC has it available is pretty uncommon - I think it's usually just available at the state/region level. My guess is that it's around 4.3% to 4.5% unemployment for the city, which is not bad at all. As bad as it sounds, you do want to have some unemployment if your economy is large and the prospect for new jobs, companies moving there, etc is happening.

This makes me wonder when was the unemployment the lowest in US history sans the Civil war, WWI or WWII?

What would be close to a sustainable lowest unemployment and what level would be to low?

This is short term

https://en.wikipedia.org/wiki/Unemployment_in_the_United_States

https://en.wikipedia.org/wiki/Unemployment


For starters here is a graph going back to 1950.

https://tradingeconomics.com/united-states/unemployment-rate



This link says the rate was 3.2% in 1929 and three and four years later at 24 and 25%.

https://www.thebalance.com/unemployment-rate-by-year-3305506

In 1944 it was at incredibly low rate at 1.2%!!!

I am wondering if they even calculated it in the 19th century. I do know the late 1890's were in the 12% range for several years though.

[marothisu]

Originally Posted by bnk

What would be close to a sustainable lowest unemployment and what level would be to low?

I've heard that between 3% and 4% is optimal. I'm guessing that in the 2% - 3% range is kind of pushing it - probably below 2% is not very good from certain perspectives (though obviously good from other perspectives).

[emathias]

Originally Posted by marothisu

I've heard that between 3% and 4% is optimal. I'm guessing that in the 2% - 3% range is kind of pushing it - probably below 2% is not very good from certain perspectives (though obviously good from other perspectives).

When I was in high school (I graduated in 1992), 6% was considered "normal." Looking at that graph, I can see why that would have been the consensus then, but I can also see that 4% seems more typical of stable times over the past 70 years.

[glowrock]

Originally Posted by marothisu

Some of these cities in the Bay Area, Portland, Denver, Minneapolis, etc have been pretty low for awhile. Unfortunately for a lot of cities, the only numbers available are not seasonably adjusted which is what you have here. I guess what you have here is everything.

NYC seasonably adjusted percentage is 4.1%. Unfortunately Chicago, LA, etc don't have seasonably adjusted data available through the BLS for city especially. I think the fact that NYC has it available is pretty uncommon - I think it's usually just available at the state/region level. My guess is that it's around 4.3% to 4.5% unemployment for the city, which is not bad at all. As bad as it sounds, you do want to have some unemployment if your economy is large and the prospect for new jobs, companies moving there, etc is happening.

And meanwhile, places like Portland have gotten so expensive, yet jobs are pretty much low-paying (much of my family is now in the Portland area), that you pretty much have to work 2 or 3 jobs just to make ends meet there.) I guess I'm wondering at what types of wages, what types of jobs these positions really are in, and the standard breakdown of positions as applied by the Feds doesn't really work nowadays anyhow.

Just seems like the books are a bit cooked, that's all. I know that's what's being reported, but wow...

Aaron (Glowrock)

[Baronvonellis]

Yea, the economy is now in broad prosperity like in the 1950's and 60's, but all the wealth is being concentrated in the top 1% instead of being spread around like then. I got a new job 6 months ago, and the company wouldn't match the salary I was getting 2 years ago, in the same position, and I had to fight just to get health insurance and benefits, since companies especially in IT only want to hire temp workers these days. At least in IT wages are going down when you factor in the cost of benefits, even though profits are going up. That's why there's no inflation. Even with a big corporate tax cut, they wanted to pay me less. Corporations are just so greedy these days, and government on the right and left just enables them in the US.

[moorhosj]

Originally Posted by Baronvonellis

Yea, the economy is now in broad prosperity like in the 1950's and 60's, but all the wealth is being concentrated in the top 1% instead of being spread around like then.

GDP growth in the 50s and 60s was around 4%, so there was more growth to go around than our current 2-3% averages.

The labor force participation rate (% of people over age 16 in the workforce) was around 67% in the 90s, but it is stuck at about 63% today. That is about 6.5 million people who "should" be working or looking for work. Some of this is due to Baby Boomer retirements and aging population. Low unemployment should lead to increased wages across the board as companies compete for talent. We are seeing this on the high-end of labor, but not at all on the low-end. In fact, since the tax cut was implemented, inflation is up but real wages are actually down. Meanwhile, the costs of education, healthcare and housing are going through the roof.

Something in our economy is broken and unless it gets fixed soon, it will lead to more political turmoil as wealth continues to accumulate at the top. Not sure the solution, probably a combination of things (eliminate stock buy-backs, increase minimum wage, guaranteed maternity leave, universal healthcare, more private sector unions).

[the urban politician]

Originally Posted by Baronvonellis

Yea, the economy is now in broad prosperity like in the 1950's and 60's, but all the wealth is being concentrated in the top 1% instead of being spread around like then. I got a new job 6 months ago, and the company wouldn't match the salary I was getting 2 years ago, in the same position, and I had to fight just to get health insurance and benefits, since companies especially in IT only want to hire temp workers these days. At least in IT wages are going down when you factor in the cost of benefits, even though profits are going up. That's why there's no inflation. Even with a big corporate tax cut, they wanted to pay me less. Corporations are just so greedy these days, and government on the right and left just enables them in the US.

^ That's a bummer. But also weird, I thought IT workers were all in high demand and making great salaries these days?

[emathias]

Originally Posted by moorhosj

GDP growth in the 50s and 60s was around 4%, so there was more growth to go around than our current 2-3% averages.

The labor force participation rate (% of people over age 16 in the workforce) was around 67% in the 90s, but it is stuck at about 63% today. That is about 6.5 million people who "should" be working or looking for work. Some of this is due to Baby Boomer retirements and aging population. Low unemployment should lead to increased wages across the board as companies compete for talent. We are seeing this on the high-end of labor, but not at all on the low-end. In fact, since the tax cut was implemented, inflation is up but real wages are actually down. Meanwhile, the costs of education, healthcare and housing are going through the roof.

Something in our economy is broken and unless it gets fixed soon, it will lead to more political turmoil as wealth continues to accumulate at the top. Not sure the solution, probably a combination of things (eliminate stock buy-backs, increase minimum wage, guaranteed maternity leave, universal healthcare, more private sector unions).

I think part of the reason we don't see more efficiency gains and more wage inflation is that some old-school companies are so profitable they don't want to make the hard choices that less profitibility forces. For example, I'm sitting in the headquarters of a company that is, on paper, a tech services company. But it's run like an old manufacturing company and should have half the number of managers it does but won't consolidate because I don't think they senior management has the heart to do it.

They should have three different areas reporting up to one VP, but they have three VPs and each only has a small part of what a good VP in a more modern company would either know off the top of his head or have data showing him on a dashboard. It's been chewing up C-level executives in the tech area because they'll fire some but the info needed is distributed and hard to find so they feel like they have to maintain a certain size of staff or they'll lose all control. Then they feel hopeless and leave.

This can't be the only company like this in the U.S. Maybe (maybe) this is a particularly bad example, but it can't be the worst, let alone the only.

The *ONLY* way this changes is another recession that forces inefficient companies out of business, or at least forces them to lean up. High-profit-margin tech companies can survive all but the worst recessions. Modern ones slim down anyway, just to be safe. Ones run by old-school managers don't like to do that. I'm just glad I'm just a consultant and am not an actually employee here.

It's tempting to start a competing company that runs on 1/3 of the tech costs this one has, that can out-market, out-sell, and undercut this one at every turn. I'm not sure of the exact breakdown, but marketing has to be the biggest expense here, buying product is a close second, and tech, while third, must still be a significant chunk of the annual budget, but could be a much smaller fraction.

[emathias]

Originally Posted by the urban politician

^ That's a bummer. But also weird, I thought IT workers were all in high demand and making great salaries these days?

IT wages are going up for people willing to move around and who can get into the right circles. For people who stay in jobs long-term, wages tend to stagnate, and companies tend to be requiring higher participation in contributing toward medical and other benefits.

There are a couple of reasons for that. First, people who stay in one role for a long time tend to be mid-career or later. In tech, your income increases rapidly when you're younger, but after a certain point it tends to plateau for most people. Second, the value companies put on institutional knowledge is very low right now. They don't care that you know every process and the history of every process. They put a higher value on people who know new processes, and can push for revamped processes.

So tech workers who have managed to keep abreast of the latest technology and are willing and able to jump around following the latest trends and highest offers are doing quite well.

Tech workers who value stability pay a pretty heavy penalty for the stability. Just by moving around I increased by annual income by 50% in about 12 months, after having prioritized stability for several years and letting my income lag behind.

[LouisVanDerWright]

Moving jobs is critical, my (now wife) fiancee switched careers from a soul sucking tax accounting firm that forced her to work 50-70 hours a week for multiple months a year to a family office type firm that basically told her to name her price (she asked for 20% more and they didn't even haggle), gives her up to 30% bonus, and has a much better work life balance. Had she kept at her accounting firm she would have gotten 3-5% raise and no increase in quality of life or bonus opportunity.

But that's how it's supposed to work isn't it? Ambitious people who feel like they have maxed out their skills can move into a lower level position in a more specialized career track and greatly increase their productivity by adding more specialization to their skills. This leads to wage gains just as a sheet metal worker learning to weld as well would.

[Baronvonellis]

Well, for me I said I just started a new job and am free to move around. IT is big, but I know the IT infrastructure side, the people that run and maintain the hardware that runs every company. Without the IT infrastructure almost every company would be shut down. The standard seems to be going to 3 month contract work with no benefits. When I started my career I rapidly increased my salary, but then I reached a plateau now. I was at my last place for 5 years, and had lots of institutional knowledge and was able to bump up my salary with pay raises. But then they wanted to get rid of me to get a younger guy making alot less. So I could of kept my job with a huge pay cut or look for something new. But starting at a new place, they didn't want to match what I had before, they had a certain cutoff for the position.

[Vlajos]

Originally Posted by emathias

When I was in high school (I graduated in 1992), 6% was considered "normal." Looking at that graph, I can see why that would have been the consensus then, but I can also see that 4% seems more typical of stable times over the past 70 years.

5% unemployment has generally been considered full employment by most economists.

[marothisu]

Regarding wages, the BLS puts out the OES (Occupational Employment Statistics) by MSA once a year. The last one was for May 2017.

https://www.bls.gov/oes/tables.htm

For the Chicago MSA, all occupations average yearly wage has gone up $9040 May 2017 compared to May 2007. Here is a look at the change in wages per major group:

1. Healthcare practitioners and technical occupations: +$17,110 per year
2. Management occupations: +$15,620 per year
3. Legal occupations: +$13,220 per year
4. Architecture and Engineering occupations: +$13,060 per year
5. Computer and Mathematical occupations: +$12,440 per year
6. Construction and extraction occupations: +$11,690 per year
7. Protective service occupations: +$9590 per year
8. Life, Physical, and Social Science occupations: +9150 per year
9. Business and Financial Operations occupations: +$8790 per year
10 Arts, design, entertainment, sports, and media occupations: +$6670 per year
11. Production occupations: +$5850 per year
12. Building and grounds cleaning and maintenance occupations: +$5570 per year
13. Office and administrative support occupations: +$5550 per year
14. Installation, maintenance, and repair occupations: +$5510 per year
15. Healthcare support occupations: +$5190 pear year
16. Education, training, and library occupations:+$4760 per year
17. Food preparation and serving related occupations: +$4630 per year
18. Farming, fishing, and forestry occupations: +$4320 per year
19. Transportation and material moving occupations: +$4060 per year
20. Community and social services occupations: +$3970 per year
21. Sales and related occupations: +$3430 per year
22. Personal care and service occupations: +$650 per year

[glowrock]

Originally Posted by marothisu

Regarding wages, the BLS puts out the OES (Occupational Employment Statistics) by MSA once a year. The last one was for May 2017.

https://www.bls.gov/oes/tables.htm

For the Chicago MSA, all occupations average yearly wage has gone up $9040 May 2017 compared to May 2007. Here is a look at the change in wages per major group:

1. Healthcare practitioners and technical occupations: +$17,110 per year
2. Management occupations: +$15,620 per year
3. Legal occupations: +$13,220 per year
4. Architecture and Engineering occupations: +$13,060 per year
5. Computer and Mathematical occupations: +$12,440 per year
6. Construction and extraction occupations: +$11,690 per year
7. Protective service occupations: +$9590 per year
8. Life, Physical, and Social Science occupations: +9150 per year
9. Business and Financial Operations occupations: +$8790 per year
10 Arts, design, entertainment, sports, and media occupations: +$6670 per year
11. Production occupations: +$5850 per year
12. Building and grounds cleaning and maintenance occupations: +$5570 per year
13. Office and administrative support occupations: +$5550 per year
14. Installation, maintenance, and repair occupations: +$5510 per year
15. Healthcare support occupations: +$5190 pear year
16. Education, training, and library occupations:+$4760 per year
17. Food preparation and serving related occupations: +$4630 per year
18. Farming, fishing, and forestry occupations: +$4320 per year
19. Transportation and material moving occupations: +$4060 per year
20. Community and social services occupations: +$3970 per year
21. Sales and related occupations: +$3430 per year
22. Personal care and service occupations: +$650 per year

Are these in inflation-adjusted dollars? If they are, it's good news. If not, then basically all but the top few occupations are pretty much treading water or losing purchasing power...

Aaron (Glowrock)

[marothisu]

Originally Posted by glowrock

Are these in inflation-adjusted dollars? If they are, it's good news. If not, then basically all but the top few occupations are pretty much treading water or losing purchasing power...

Aaron (Glowrock)

Not inflation adjusted. Was going to do that but didn't have enough time. Top half ones are okay. Bottom ones aren't necessarily ok. I'll adjust for inflation later.

[moorhosj]

Originally Posted by marothisu

Not inflation adjusted. Was going to do that but didn't have enough time. Top half ones are okay. Bottom ones aren't necessarily ok. I'll adjust for inflation later.

Inflation was 18.1% from 2007 to 2017.

[emathias]

Originally Posted by marothisu

Regarding wages, the BLS puts out the OES (Occupational Employment Statistics) by MSA once a year. The last one was for May 2017.

https://www.bls.gov/oes/tables.htm

For the Chicago MSA, all occupations average yearly wage has gone up $9040 May 2017 compared to May 2007. Here is a look at the change in wages per major group:

1. Healthcare practitioners and technical occupations: +$17,110 per year
2. Management occupations: +$15,620 per year
3. Legal occupations: +$13,220 per year
4. Architecture and Engineering occupations: +$13,060 per year
5. Computer and Mathematical occupations: +$12,440 per year
...

What I do falls in category 5.

I graduated from college in 1996. In inflation-adjusted dollars, if we call my 1997 income X, then in 2007, then I earned 65% more in 2007 as compared to 1997. Over the next 12 months, just in my primary career income (I also earn some income from Airbnb and other minor sources), I'll earn 75% more than I did in 2007. I also added a masters degree between 2007 and today, just for additional context.

If I hadn't made the job moves I have over the past 12 months, I'd only be earning about 16% more than I did in 2007. So movement is critical.

Without adjusting for inflation, I was earning about 116% more in 2007 compared to 1997, and in the next 12 months will earn about 110% more than I did in 2007. So there is growth in income there, but I also know that if I hadn't made certain job changes I'd be about 30% lower now. Being willing to take some degree of risk and staying on top of things is important if you want income growth, even in tech.

I also know that I could be earning even more than I do. If I were spending about an extra 10 hours a week on career development, I could probably pull down an additional 50% over what I already earn, and if I were willing to do that plus move to the Bay Area or New York, I could probably earn another 25% over that.

So it really depends on what you're willing to do. In tech, if you have the chops, take risks, and work as hard as doctors do, you can earn more than most doctors do and support a family at an upper-middle-class level on a single income. Or you can have a fairly cush lifestyle for a lot less work and still earn enough to have an upper-middle-class lifestyle as a single person, or if you have dual incomes at that level, for a whole family. It's those families that support the expensive condos downtown, and single-family homes in the city and suburbs that cost between $750k and $1.5k.

[glowrock]

Originally Posted by marothisu

Not inflation adjusted. Was going to do that but didn't have enough time. Top half ones are okay. Bottom ones aren't necessarily ok. I'll adjust for inflation later.

Don't get me wrong, marothisu, I never expected YOU to do it. I just asked the question so I knew what I was looking at! You've been a treasure trove of amazing information ever since I've moved to Chicago, and likely far longer than that!

Aaron (Glowrock)

[glowrock]

Originally Posted by moorhosj

Inflation was 18.1% from 2007 to 2017.

I've always had my doubts about the inflation rate, especially given things like housing, healthcare, etc... Food isn't markedly more expensive for the most part, consumer goods are generally probably a bit less expensive overall (especially electronics), but, at least in many areas, housing and healthcare, to name two huge ones, are rising much faster than the inflation rate.

I guess the moral of the story is, other than a relatively few professions (and I'd say that MORE SSPers are probably in those specific professions than the average population!), the average wage earner isn't doing much better, if at all, now vs. 2007 or even 1997 in terms of overall income (adjusted for inflation and also presumably years of experience, which is something that can't really be factored into this equation)

Aaron (Glowrock)